Ukraine and the EU

16/05/2016 - 19:06

EU relations with Country

This page highlights the key aspects of political, economic and trade relations between the European Union (EU) and Ukraine, as well as financial assistance programmes in place and the role of civil society in steering the relations into the future.

The European Union supports Ukraine in ensuring a stable, prosperous and democratic future for all its citizens. The EU is unwavering in its support for the country's territorial integrity and sovereignty and sees the full implementation of the Minsk agreements as the basis for a sustainable, political solution to the conflict in the east of the country. Since spring 2014, the EU has stepped up its support for economic and political reforms in Ukraine.

Close partners

Ukraine is a priority partner for the European Union, also within the EU's Eastern Partnership. An Association Agreement, including a Deep and Comprehensive Free Trade Area (DCFTA) between the EU and Ukraine, was negotiated between 2007 and 2011 and signed on 21 March and 27 June 2014. It replaces earlier frameworks for cooperation. The Association Agreement is the main tool for bringing Ukraine and the EU closer together: it promotes deeper political ties, stronger economic links and the respect for common values.

Parts of the Association Agreement have been provisionally applied since 1 November 2014. This has enhanced EU-Ukraine cooperation on human rights, fundamental freedoms and the rule of law; political dialogue and reforms; movement of persons; and strengthened cooperation in a number of sectors, including, energy; the environment and climate action; transport; financial services; public finances, including anti-fraud; agriculture and rural development; fisheries and maritime policies; consumer protection and civil society.

In July 2017, the ratification process of the Association Agreement on the side of the EU and its Member States will have been completed, which will allow the Agreement to enter into force on 1 September 2017.

Ukraine is also a key partner country within the European Neighbourhood Policy (ENP) and the Eastern Partnership, the latter involving all EU countries as well as Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova and Ukraine. Regular discussions are held on matters of mutual interest, including through EU-Ukraine Summits which are held every year.

On 1 September 2017, the EU-Ukraine Association Agreement came into full force. The Association Agreement, including its Deep and Comprehensive Free Trade Area (DCFTA) part, is the main tool for bringing Ukraine and the EU closer together. The DCFTA offers Ukraine a framework for modernising its trade relations and for economic development by opening up markets and harmonising laws, standards and regulations in various sectors. This will help align key sectors of the Ukrainian economy with EU standards.

The DCFTA has been provisionally applied since 1 January 2016, constituting a major milestone in bilateral trade relations and offering new economic opportunities to both the EU and Ukraine. Ukrainian businesses receive stable and predictable preferential access to the largest market in the world, with over 500 million consumers. EU businesses are able to benefit from easier access to the Ukrainian market and build new relationships with Ukrainian suppliers and partners.

On 1 October 2017 the additional autonomous trade measures of the EU for Ukraine entered into force. The EU regulation on the measures tops up the quantities of agricultural products that Ukraine can export to the EU under the Association Agreement without paying customs duties. It also accelerates the elimination of EU import tariffs for several industrial products, as foreseen in the Association Agreement.

Snapshot of trade statistics

The first concrete results of implementation of the DCFTA can already be seen: in the first half of 2017 – according to Eurostat – trade in goods between the EU and Ukraine increased by 23% and the EU continues to strengthen its position as the first trade partner of Ukraine, overall, the EU accounts for around 40% of Ukraine's total exports.

The main products Ukraine exports to the EU are base metals and articles thereof, vegetable products, mineral products, electric machinery and appliances, vegetable fats and oils. The main products the EU exports to Ukraine are machinery and appliances, products of the chemical industry, transport equipment, plastics, rubber and articles thereof and mineral products.

Investments

Foreign trade and investments are vitally important for both the Ukrainian and the EU economies, in terms of growth and jobs, lower prices, better quality and greater choice for consumers through increased competition, and so on.

The EU and Ukraine continue to work to ensure the opportunities and benefits for EU and Ukrainian business within the framework of the DCFTA.

Since spring 2014, Ukraine has embarked on an ambitious reform timetable aiming to stabilise its economy and improve the livelihoods of its citizens. Ukraine and the EU have jointly defined a reform agenda (the Association Agenda, which was last updated in March 2015) and follow the progress of this closely. The fight against corruption, reforming the judiciary, constitutional and electoral reforms, the improvement of the business climate, and reform of public administration, including decentralisation, are among the top priorities on the agenda.

In addition to political support, the EU has pledged a €12.8 billion support package for the next few years to support the reform process.

Programmes committed and under implementation include, inter alia:

€3.41 billion in loans as EU macro-financial assistance (MFA), of which €2.81 billion has already been provided. This is the largest amount of macro-financial assistance that the EU has disbursed to any non-EU country. Ukraine will be able to benefit from a final €600 million disbursement under the third MFA programme, subject to the successful implementation of the measures specified in the memorandum of understanding jointly agreed by Ukraine and the EU.

€3 billion in loans signed by the European Investment Bank (EIB) between 2014 and the end of 2016 to support infrastructure development and reforms in the transport, energy, agriculture, education and municipal sectors, as well as substantial financial and technical support for SME development. A Memorandum of Understanding has been agreed with the Ukrainian Government on future EIB investments.

€2.7 billion in investment from 2014-2016 from the European Bank for Reconstruction and Development, thanks to the support of the EU and its Member States, including as donors, to help develop and reform, inter alia, the banking sector, agribusiness, and small businesses in Ukraine, including facilitating the purchase of $300 million of gas for the 2015-2016 heating season. This is in addition to nuclear safety projects.

€879.2 million in grants including:

A €355 million state building contract supporting the fight against corruption as well as the reforms of the public administration, the judiciary, the constitution and the electoral framework.

A €10 million civil society programme to reinforce its capacity to support and monitor the reform process.

A €110 million programme aimed at developing the private sector and fostering Ukraine’s economic recovery. Technical assistance is provided to improve the legislative framework for SMEs and promote the implementation of the Association Agreement, while the EU is supporting the setup of business advisory centres in the regions and facilitating the access of SMEs to finance.

A €90 million decentralisation programme supporting local governance. Local authorities receive advice and support to improve transparency, accountability and responsiveness to the needs of the population. The delivery of local administrative services throughout Ukraine is being enhanced.

A €15 million anti-corruption programme supporting the newly established anti-corruption institutions, strengthening parliamentary oversight and capacities of civil society and independent media to contribute to the fight against corruption.

A €28.5 and a €37.5 million technical cooperation facility (in 2016 and 2017 respectively) to raise Ukrainian public authorities' capacities in designing and implementing key reforms and supporting the implementation of the Association Agreement.

A €104 million Public Administration Reform programme to help put in place a new generation of Ukrainian public servants, organise the government according to European standards, implement best practices in policy-making and advance key sector reforms.

A €52.5 million Rule of Law programme providing support to justice and law enforcement reforms.

€76.7 million from the Instrument contributing to Stability and Peace (IcSP) from 2014 onwards to support election observation and confidence building measures, the OSCE Special Monitoring Mission, Internally Displaced Persons (IDPs), conflict-affected populations, restoration of governance and reconciliation in crisis-affected communities as well as police reform.

Further European Neighbourhood Instrument 2017 programmes for a total budget of € 200 million in the areas of energy efficiency, public finance management and support to the conflict-affected areas of eastern Ukraine under government control, which will be adopted before the end of this year.

Online consultation

This part of the website allows civil society organisations (CSOs) to provide their views on how the relationship between Ukraine and the EU will develop in the future. To take part, organisations can simply register online.

The database of contributors will help the Delegation see who is interested in different policy aspects so that more focused consultations can be conducted in the future. As the database will be in the public domain, it will also ensure that organisations' contributions are made in a transparent manner.

Topics can include discussions on draft political and operational documents, consultations on ad hoc initiatives or establishment of priorities in programmes of specific interest to civil society. All contributions to individual consultations are available on the website. The Commission also posts feedback on the website, enabling us to create a productive and useful record of interaction between the European Commission and civil society.

EU Country Roadmap for Engagement with Civil Society in Ukraine

The EU Delegation, together with EU countries and in consultation with civil society and national authorities, developed the EU Country Roadmap for Engagement with Civil Society in Ukraine. The Roadmap identifies eight long-term priorities for cooperation and coordination in this area. The priorities cover an enabling environment, policy analysis, legitimacy, the Association Agreement, conflict, accountability, human rights, economic development, and many other areas of concern to CSOs.

The EU has been at the forefront of the response to the humanitarian crisis due to the conflict in Eastern Ukraine. Humanitarian needs are still high: 3.8 million people are estimated to be in need.

The European Union and its Member States have provided financial support to the most vulnerable people. Humanitarian aid totals €222 million, of which €88.1 million has been provided by the EU. This funding provides support to the most vulnerable people affected by the conflict in the non-government controlled areas and along both sides of the contact line. This assistance addresses the basic needs of those most affected by the conflict, wherever they are. This includes provision of shelters, health care, protection, food and non-food items, water, sanitation and other emergency aid. If the right conditions are in place, assistance is delivered through cash and vouchers.

In addition, the EU contribution to early recovery and peacebuilding operations totals € 177million. Early recovery operations cover small repair works; activity to promote the social and economic integration of internally displaced persons (IDPs) and to build links with host communities; mine risk education activities; psychosocial support to conflict-affected communities.

The assistance is being delivered through the Commission's humanitarian partner organisations, including People In Need (PIN), ICRC, ACF, ACTED, UNHCR, Save the Children, Premiere Urgence International, MDM, DRC, NRC, OCHA and UNICEF.